How Labor Market Equilibrium Is Affected by the Supply and Demand of Labor
Running head: HOW PEOPLE MAKE ECONOMIC DECISIONS
How People Make Economic Decisions
Misty D. Johnson
University of Phoenix
How People Make Economic Decisions There are four principles of individual decision-making, individuals facing trade-offs, analyzing what individuals give up to get, analyzing marginal costs and benefits, and reviewing incentives. Furthermore, many individuals could see how these principles affect the economy as a whole. Making decisions in the economic world is something that numerous individuals do on a daily basis. To begin, people face trade-offs, for instance, if an individual is in college he or she may spend more time in on particular subject. To begin lets say that the class that is being studied by the student is Anatomy and Physiology, this class is separated into two segments consisting of theory and practical, both being 2 hours of class time. The student could spend more time on studying the practical part of the course due to the fact that he or she is failing this section of the class. In the theory segment the student is passing so he or she could spend more time in practical study sessions in order to benefit in balancing their grades. The incentive gained could be that the student could pass the class and this would allow him or her to go further in their studies. How does this affect the economy? It allows more educated individuals into the world for better education. Next, consider the cost that is given up in order to getting what an individual wants. In economics, cost is often viewed in the terms of the opportunity given up when a decision is made; this is called opportunity cost (Gale, 2008). For example, I chose to go back to college my personal trade off is that I do not have much time for anything other than work and school; therefore, I have traded my time for a higher education . The incentive in this decision was that I would be able to choose a different career path. When
How People Make Economic Decisions
Misty D. Johnson
University of Phoenix
How People Make Economic Decisions There are four principles of individual decision-making, individuals facing trade-offs, analyzing what individuals give up to get, analyzing marginal costs and benefits, and reviewing incentives. Furthermore, many individuals could see how these principles affect the economy as a whole. Making decisions in the economic world is something that numerous individuals do on a daily basis. To begin, people face trade-offs, for instance, if an individual is in college he or she may spend more time in on particular subject. To begin lets say that the class that is being studied by the student is Anatomy and Physiology, this class is separated into two segments consisting of theory and practical, both being 2 hours of class time. The student could spend more time on studying the practical part of the course due to the fact that he or she is failing this section of the class. In the theory segment the student is passing so he or she could spend more time in practical study sessions in order to benefit in balancing their grades. The incentive gained could be that the student could pass the class and this would allow him or her to go further in their studies. How does this affect the economy? It allows more educated individuals into the world for better education. Next, consider the cost that is given up in order to getting what an individual wants. In economics, cost is often viewed in the terms of the opportunity given up when a decision is made; this is called opportunity cost (Gale, 2008). For example, I chose to go back to college my personal trade off is that I do not have much time for anything other than work and school; therefore, I have traded my time for a higher education . The incentive in this decision was that I would be able to choose a different career path. When